R&D Tax Credit for Energy &
Cleantech

Industry-Specific Requirements for Energy & Cleantech

The energy transition is driving one of the most extensive technological transformations of our time – generating enormous potential for the R&D tax credit. Grid integration and smart grid research are among the most classic R&D topics in the sector. The increasing feed-in of volatile renewable energy sources requires novel control algorithms that ensure grid stability in real time – while the share of rotating masses in the system simultaneously decreases. Development work on predictive grid management systems that link weather data, consumption forecasts and storage availability into feed-in schedules typically meets all BSFZ criteria for experimental development. Research on decentralised energy management systems (DEMS), virtual power plants and blockchain-based peer-to-peer energy trading platforms is also eligible under the FZulG, provided technical uncertainties are documented – for example when scaling to millions of prosumer endpoints, with latency requirements below 100 ms for primary frequency response, or when integrating heterogeneous communication protocols (IEC 61850, OCPP, Modbus TCP) into a unified control system. NOVARIS supports energy suppliers and grid operators in structuring these R&D projects so that their experimental character is clearly demonstrable to the BSFZ.

Energy storage technologies represent one of the most promising funding areas in the energy sector. The development of advanced battery storage – from lithium iron phosphate (LFP) to sodium-ion cells to next-generation solid-state batteries – involves significant experimental components: materials research on cathode materials, electrolyte optimisation, cell design for improved energy density and cycle life, and the development of intelligent battery management systems (BMS) with AI-supported state estimation (SOC/SOH) and degradation prediction. In hydrogen, electrolyser development (PEM, AEL, SOEC), fuel cell system integration, pressure storage concepts and hydrogen logistics solutions are typical R&D projects. Thermal storage systems – latent heat storage, thermochemical storage, high-temperature solid-state storage – likewise require systematic research on storage materials, heat transfer concepts and system integration. Crucial for eligibility: scaling from laboratory prototypes to industrial scale (e.g. from a 10 kWh lab cell to a 1 MWh storage system) qualifies as experimental development, provided technical uncertainties must be overcome – for example regarding thermal management, safety concepts or degradation behaviour under real operating conditions.

The development of innovative power electronics based on SiC and GaN generates particularly high eligible R&D costs in the energy sector. Wide-bandgap semiconductors such as silicon carbide (SiC) and gallium nitride (GaN) enable inverters, rectifiers and DC/DC converters with significantly higher efficiencies, lower switching losses and more compact form factors – but require fundamentally new circuit concepts, gate driver designs, thermal layouts and EMC strategies. Validating these power electronics under real grid conditions – grid fault ride-through per VDE-AR-N 4120, anti-islanding detection, harmonic compensation per EN 61000-3-12 and reactive power provision – constitutes experimental development under the FZulG. The development of multi-level converter topologies for medium-voltage applications, bidirectional charging stations (V2G) and solid-state transformers also falls within the eligible research fields. Our consultants with an electrical engineering background identify on average 40–55% more eligible R&D components in typical power electronics portfolios than non-specialist generalists.

Certification and standards testing according to IEC standards is frequently underestimated in the context of the R&D tax credit. Yet IEC certification processes – IEC 61215 and IEC 61730 for PV modules, IEC 61400 for wind turbines, IEC 62109 for inverters, IEC 62619 for stationary battery storage – generate systematic test protocols, experimental results and measurement data that serve as robust R&D evidence. When technical problems arise during certification that require iterative design adjustments (e.g. failure in the damp heat freeze test, insufficient PID resistance, EMC limit exceedances), this constitutes experimental development. NOVARIS helps document these iteration loops cleanly and prepare the knowledge gained for the BSFZ application. Furthermore, the optimisation of renewable energy systems – from aerodynamic rotor blade development for wind turbines to research on perovskite tandem solar cells to efficiency improvements in biomass gasification plants – encompasses a broad field of eligible activities. The development of monitoring systems for predictive maintenance, based on machine learning to predict failures in wind turbines or PV inverters, also typically qualifies as R&D. Our energy technology consultants support the identification of eligible projects along the entire energy value chain – from generation through storage and conversion to intelligent distribution and consumption optimisation.

Eligible Energy Research Projects

The energy transition is driving massive R&D investments across the entire sector – from generation through storage to intelligent distribution. The R&D tax credit offers energy companies, equipment manufacturers and technology developers tax-based refinancing of these expenditures. The following project types are regularly recognised as eligible by the BSFZ.

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Novel Heat Pump Technologies

Advancing heat pump systems beyond the state of the art is a growing R&D area with high funding potential. Eligible projects include researching natural refrigerants (e.g. propane R-290 or CO₂ R-744) in high-temperature heat pumps targeting flow temperatures above 80 °C for industrial process heat, developing multi-stage cascade systems with novel compressor concepts for extreme temperature lifts, and designing hybrid systems that integrate heat pump, solar thermal and seasonal heat storage in a novel control concept. A NOVARIS client – a mid-sized manufacturer of industrial heat pumps – developed a two-stage system with transcritical CO₂ cycle intended to efficiently provide process heat at 130 °C for the first time. The technical uncertainty lay in whether the overall efficiency (COP) could reach the economic threshold of 2.5 under real operating conditions. The project was recognised as experimental development with an annual R&D tax credit of €95,000.

Green Hydrogen – Production and Storage Technologies

Green hydrogen research offers extraordinary potential for the R&D tax credit. Eligible projects include developing novel electrolyser concepts – particularly AEM electrolysis (Anion Exchange Membrane) as a cost-effective alternative to PEM electrolysers, researching catalytic materials with reduced precious metal content (e.g. iridium-free anode catalysts for PEM electrolysis), and designing innovative hydrogen storage systems based on metal hydrides or LOHC (Liquid Organic Hydrogen Carriers). Technical uncertainty in hydrogen research is particularly multifaceted: alongside the performance of new materials, long-term stability, degradation mechanisms and scalability must be addressed simultaneously. NOVARIS has already successfully brought several projects in alkaline and PEM electrolysis as well as fuel cell development to funding approval and supports companies in precisely delineating eligible R&D from routine engineering.

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Smart Grid Optimisation and Grid Stabilisation

Intelligently controlling power grids with a growing share of renewable energy requires fundamentally new algorithms and system concepts. Eligible projects include developing predictive grid management algorithms that fuse generation and consumption forecasts based on weather data, historical load profiles and real-time smart meter data, researching decentralised control architectures for virtual power plants (e.g. based on multi-agent systems or distributed reinforcement learning), and designing novel congestion management algorithms for distribution networks with bidirectional energy flows. An energy utility developed, with NOVARIS support, an ML-based algorithm for voltage band optimisation in low-voltage networks with high PV penetration. The technical uncertainty was whether the algorithm could reliably ensure grid stability under real-time conditions with incomplete measurement data – an aspect recognised as experimental development.

Innovative Energy Storage Systems

Beyond conventional lithium-ion batteries, alternative energy storage technologies offer a broad field of eligible R&D. Typical projects include developing redox flow batteries with novel electrolyte formulations (e.g. based on organic molecules as a cost-effective alternative to vanadium), researching thermal energy storage with phase change materials (PCM) or high-temperature solid-state storage for industrial waste heat utilisation, and designing compressed air energy storage (CAES) with adiabatic heat recovery for stationary large-scale storage applications. Technical uncertainty in storage technologies regularly concerns whether the targeted combination of energy density, cycle life, efficiency and material cost is technically achievable. NOVARIS has supported companies in stationary storage systems, thermal engineering and plant construction with their applications – from clearly delineating R&D components from pure plant engineering to convincingly presenting technical novelty.

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Our tip: In the energy sector, pilot plants and demonstration projects are also frequently eligible, provided they serve to validate novel technologies under real conditions. Software developments for plant control, grid modelling or energy management can likewise be independently eligible. In a complimentary initial consultation, we analyse your entire R&D portfolio.